Staying independent through out-of-court restructuring — the only one of the big four to avoid both bankruptcy court and a bank parent (2009)

It shrank itself deeply in order to stay its own

The core of this decision is that Aiful chose to shrink itself deeply in order to remain independent. Corporate reorganization would have lightened the debt, but at the cost of the listing and of its standing. Going under a bank would have thickened the capital, but the founding family’s management would have been diluted. Aiful took neither fruit: it asked its lenders for a standstill and bought time, cut headcount and branches by nearly half, and brought its own size down to match a shrinking market. It took the road of paying off the past — the refund claims — by itself, while remaining independent.

That road was not an easy one. A standstill is not debt forgiveness: the roughly $3.0B (¥280bn) deferred remained principal to be repaid. Refunds continued long after the agreement, and in the year to March 2015 the company sank back into loss on additional provisions. Even so it did not disappear; without a bank’s name attached to it, it rebuilt its loan book and later returned to net profit in the ¥20 billion range. The weight of the 2009 choice to survive as an independent was verified over the decade that followed.